External scrutiny

Our operations are subject to scrutiny from a number of external entities, including the Australian National Audit Office (ANAO), the Commonwealth Ombudsman, the Australian Information Commissioner and various parliamentary committees. This subsection reports on inquiries, audits, reviews and legal actions relevant to DHA in 2015−16.

Australian National Audit Office (ANAO)

The ANAO did not release any reports relating specifically to DHA during 2015−16. However, they published 35 performance audit reports and one financial statement audit report. Topics relevant to our business included cyber resilience, implementation of audit recommendations, confidentiality in government contracts and administration of the National Rent Affordability Scheme.

Commonwealth Ombudsman

The Commonwealth Ombudsman did not release any reports relating to DHA during 2015−16.

The Ombudsman's office received 49 complaints concerning our business from 1 July 2015 to 30 June 2016. Of these, they investigated 12 complaints and 1 was awaiting assessment. They decided not to investigate 36 complaints (74 per cent of total complaints received) as follows:

• 28 were the subject of review or complaints mechanisms within DHA. Complainants were advised to contact us or submit a redress of grievance
• 3 advised of another oversight agency. Complainants were advised to contact the policing agency
• 2 did not provide sufficient detail or evidence to pursue. Complainants were asked to provide additional information and/or documentation but it was not received
• 3 were formally withdrawn by the complainants.

Parliamentary committees

Senate Standing Committee on Foreign Affairs, Defence and Trade

Inquiry into the operations of DHA

On 2 December 2015, the Senate requested the committee undertake an inquiry into the operations of DHA with particular reference to:

1. senior management arrangements and Board composition
2. whether the requirements of the DHA Act have been met
3. how the review announced by the Minister for Finance on 11 May 2015 will affect the accounting, information technology and business reporting systems
4. what role land sales will play in future business planning, and what implications there are for current residents if existing housing stock is sold.

We were invited to make a submission and elected to do so. Seven other entities, including the Department of Defence, the RSL Australia and the Australian Housing and Urban Research Institute (AHURI), also made submissions. These are publicly available on the committee's website.

We attended a public hearing held on 23 March 2016 and sent a letter to the committee Chair on 6 May 2016 to provide further information. The committee was scheduled to conclude its deliberations on 22 June 2016, however ceased to exist following dissolution of the Senate on 9 May 2016 for a general election (on 2 July 2016).

Parliamentary Standing Committee on Public Works

Our new development projects are no longer under the scrutiny of the Parliamentary Standing Committee on Public Works, however, we must provide post-implementation reports on projects previously endorsed by the committee as they are completed.

Projects that we undertake as part of our Defence-funded upgrades program must be referred to the committee. During 2015−16, we submitted three notifications for minor works ($2.0 million to $15.0 million) for Royal Military College, Duntroon (ACT), RAAF Base Learmonth (WA) and Kokoda Barracks, Canungra (QLD). All were endorsed and are currently under construction.

Independent reviews and investigations

Forensic Review

In May 2015, following completion of an independent scoping study, the government announced it would retain ownership of DHA. At the same time, it announced a reform project to:

The Department of Finance engaged KordaMentha (KM) to conduct a Forensic Review of our operations from July 2015. We provided KM access to business information and facilitated a number of meetings with key personnel.

We received a copy of KM's final report on 8 April 2016. The Forensic Review made 34 recommendations, forming 60 distinct items with many interdependencies. These were broadly divided into eight sections or key topics:

1. Financial stability
2. Finance
3. Housing stock
4. Operations
5. Governance and reporting
6. Selected projects
7. Data analytics
8. A governance structure for implementation of the recommendations.

We immediately commenced a major business transformation program to implement the recommendations by 30 June 2016, as requested by our Shareholder Ministers. An independent chair and representatives from DHA, KM, Defence and Finance played a vital role in overseeing the program and carrying out the scope of work. We also obtained input from expert consultants, including C42 Consulting, KPMG, Newgate Australia, Minter Ellison, Synergy Consulting and EY on specific issues.

There are no outstanding actions—33 of the 34 recommendations were fully or partially completed by 30 June 2016 and a report against each recommendation was signed off by the Steering Committee.¹³ The remaining item was suspended with agreement from all parties based on KM's preliminary observation that it was unlikely to identify practices that would warrant a material change to our protocols beyond which the Forensic Review had already identified.

We also chose to pursue a scope of work beyond the 34 recommendations, such as the implementation of improved reporting and enhancements to planning and supporting information technology tools. Plans were created for each of these items where implementation would occur after 30 June 2016. A small team has been established to complete this further work throughout 2016–17. We will provide written advice on these matters in our quarterly reports to Shareholder Ministers.

Implementing the recommendations in consultation with KM, Defence and Finance has provided our Board and senior management team a valuable opportunity to consider issues affecting our business operations in the longer term.

Australian Federal Police (AFP) investigation

In March 2016, we were advised that a matter relating to DHA had been referred to the AFP. We later learned that the AFP were undertaking a formal investigation. As at 30 June 2016, we had not been informed of the status of the AFP's enquiries, therefore, cannot confirm whether they are continuing or if a finding has been made.

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12 Budget papers 2015–16—Part 2: Expense Matters Finance.

13 Recommendations were considered fully completed where they were addressed, deliverables including business change had been implemented, and there was an audit trail to substantiate it. Recommendations were considered partially completed where further work was required because either DHA did not receive final input from an external consultant or stakeholder, the works could not be meaningfully implemented in the short timeframe, or the works were part of a longer-term restructuring or transformational program.